Rupiah and stock market continue to gain ground
Rupiah and stock market continue to gain ground
JAKARTA (JP): The rupiah surged yesterday by another 100
points against the U.S. dollar and stock prices increased 1.67
percent.
Foreign exchange dealers said spot rupiah, which opened at
2,780/2,810, strengthened and broke the resistance level of 2,700
to 2,650 in morning trading and closed at 2,670/2,690.
One local foreign exchange bank dealer said the current tight
monetary policy had forced local players to sell their dollar to
meet their rupiah obligations.
"Trading is quite big today with several local banks selling
dollar to back up their rupiah liquidity," said one local foreign
exchange bank dealer.
He said the government's efforts to stabilize the rupiah
through the tight monetary policy had borne fruit.
"I salute the government's success in stabilizing rupiah. It
proves that our economic fundamentals are really good," the
dealer said.
Coordinating Minister for Economy and Finance Saleh Afiff said
yesterday the government had achieved its first target to bring
rupiah below the upper level of Bank Indonesia's (the central
bank) now defunct intervention band (Rp 2,378-2,682 against the
U.S. dollar).
"We have been successful in forcing the rupiah to cross below
the upper level of the defunct intervention band. And we foresee
that the rupiah will continue to strengthen," Afiff told
journalists.
The rupiah fell to an historic low of 3,045 against the
greenback after the central bank floated the rupiah last week in
the wake of sustained speculative attacks on regional currencies.
The rupiah started recovering following the central bank's
shock increase of interest rates Tuesday. It doubled one-week
Bank Indonesia Certificates (SBI) to 20 percent, 2 to 22 percent,
one-month to 30 percent and 3 to 28 percent.
Afiff reiterated yesterday that the government would continue
to tighten rupiah for some time until market jitters calmed down
and the rupiah stabilized.
Businessman Sofyan Wanandi yesterday urged the government to
gradually ease the tight rupiah liquidity to give businesses a
chance to breathe.
Sofyan said most businesspeople did not know what to do with
their businesses as rupiah remained tight.
"Businesspeople are confused and have lost direction as they
don't know when the tight monetary policy will end. Consequently,
many of them have entered the frenzy to take benefit of the
situation," Sofyan said.
He suggested the central bank gradually cut their SBI rates
and supply rupiah bit by bit to signal to businesses that the
tight monetary policy would end soon.
Meanwhile, share prices on the Jakarta Stock Exchange ended
higher yesterday as the strengthening of the rupiah boosted
sentiment, stock brokers said.
But news that Standard & Poor's downgraded outlook for some of
the country's largest banks pared some gains, they added.
The Jakarta composite index again broke the 600 level, jumping
9.89 points, or 1.67 percent, to close at 603.06 points.
Advancers led decliners by 103 to 34 with 50 stocks unchanged.
Total turnover was 451.08 million shares, valued at Rp 1.07
trillion (US$399 million).
ANZ Securities' head of research, Tom Soulsby, said the
increase was a result of "bottom fishing" from investors as they
saw many good stocks were already very cheap.
"Foreign investors have returned today and have been active
buying good value stocks," Soulsby said.
He said many share prices were already undervalued as the
overall market had declined by 35 percent in dollar terms during
the last three weeks.
But he warned the stock market would continue to be volatile
as long as uncertainties in the currency market remained.
(jsk/rid)
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